|
Getting your Trinity Audio player ready...
|
Cement makers in Africa’s largest economy are lax in collecting what’s owed to them despite receding inventories in warehouses as strong cash flow position put them in a position to lessen their credit terms.
For the first three months through March 2017, the cumulative total accounts receivable (AR) of the four leading cement makers namely, Dangote Cement Nigeria Plc, Lafarge Africa, Ashaka Cement Nigeria Plc and
Sokoto Cement Plc increased by 25 percent to N182.80 billion from N146.37 billion the previous year, data gathered by BusinessDay revealed.
Sales of the firms for the period rose 51.30 per cent within the period, indicating that substantial part of the revenue was derived from credit sales.
Cumulative cash and cash equivalents in the books of the four dominant players in the industry increased by 31.80 per cent to N188 billion, which means they are liquid enough to pay dividend and embark on future expansion.
Industry average collection period was 219.96 days, which is to say it takes 220 days for these firms to collect money owed to them by customers. Industry average collection period of cement makers in Europe and North America is less than 70 days.
Analysts attribute rising AR to liquidity pressures on customers and government as an economic downturn crippled consumers’ cash flow.
A sharp drop in oil price and a severe dollar shortage tipped the country to its first recession 25 years.
Nigeria’s economy contracted by 0.52 per cent in the first quarter of the year, tough lower than the 1.50 per cent figure recorded in the last quarter of last year.
The capitalization ratio, which measures the debt component in the firms’ capital structure, declined to 45.67 percent in March 2017 from 47.15 per cent the previous year.
The low level of debt and a healthy proportion of equity in the capital structure of these firms is an indication of financial fitness.
Stocks of most of the major players in the industry have been rallying as their first quarter stellar performance and expansion plans continue to bolster investor confidence.
Dangote’s share price gained 4.73 per cent to close at N175 at the close of trading on Wednesday. Year-to-date return (YTD) stood at 0.58 per cent. Lafarge’s share price closed at N48 the same day with a YTD return of 17.22 per cent.
Sokoto cement’s share price closed at N5.46 while YTD was 9.20 per cent. Asaka cement’s share price closed at N11 with a YTD return of -8.49 per cent.
BALA AUGIE
